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eMachines to miss sales targets

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eMachines has joined the barrage of revenue warnings spewing from the IT industry this festive season.

The Korean-owned, US-operated PC maker today said it expected sales of between $120 million and $130 million for the fourth quarter ending December 30 - below those of the previous year's Q4. It also warned that losses would be larger than feared - around 19-23 cents loss per share.

It blamed "continued economic weakening, a significant decrease in consumer demand for personal computers, a general slowdown in retail sales, and a channel-wide over supply of personal computer inventory".

The loss will also take into account discounts and extra rebates offered to lure customers into buying its products - the company makes stripped-down machines for Internet access aimed generally at the cheaper end of the market.

eMachines said the loss would also include inventory charges, adding that it didn't expect to see sales pick up before the second half of 2001.

Gross margin is expected to get back to traditional levels in Q2 as the company's inventory normalizes by the end of the first quarter.

Things must be bad with inventory levels - eMachines was one of the first vendors to spot the downward shift in the US PC market and had already cut Q4 PC production by 20 per cent in anticipation. ®

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